"Common misperception about legality of fantasy sports: it's not only skill vs. chance--must also examine whether entry fees make up prizes"

"In many states and under UIGEA, fantasy sports would be considered illegal if entry fees make up prize, even if deemed a contest of skill"

"Predetermined prize enables DFS to argue that entry fees do not constitute prize and thus no bet or wager"

Under UIGEA for a Fantasy Contest to be legal using real money the prize pool must be stated in advance. Unlike a poker tournament where the entry fees, as more players join, grow the prize pool. Therefore the entry fees and prize, in DFS, are separated.

Industry executives believe this position is rock-solid on a federal level.

It is, here is the law:

Quote:

In this subchapter:

(1) BET OR WAGER. The term 'bet or wager'–
(A) means the staking or risking by any person of something of value upon the outcome of a contest of others, a sporting event, or a game subject to chance, upon an agreement or understanding that the person or another person will receive something of value in the event of a certain outcome;
(B) includes the purchase of a chance or opportunity to win a lottery or other prize (which opportunity to win is predominantly subject to chance);
(C) includes any scheme of a type described in section 3702 of title 28;
(D) includes any instructions or information pertaining to the establishment or movement of funds by the bettor or customer in, to, or from an account with the business of betting or wagering; and
(E) does not include–
(i)…(viii)
(ix) participation in any fantasy or simulation sports game or educational game or contest in which (if the game or contest involves a team or teams) no fantasy or simulation sports team is based on the current membership of an actual team that is a member of an amateur or professional sports organization (as those terms are defined in section 3701 of title 28) and that meets the following conditions:(I) All prizes and awards offered to winning participants are established and made known to the participants in advance of the game or contest and their value is not determined by the number of participants or the amount of any fees paid by those participants.
(II) All winning outcomes reflect the relative knowledge and skill of the participants and are determined predominantly by accumulated statistical results of the performance of individuals (athletes in the case of sports events) in multiple real-world sporting or other events.
(III) No winning outcome is based–
(aa) on the score, pointspread, or any performance or performances of any single real world team or any combination of such teams; or
(bb) solely on any single performance of an individual athlete in any single real-world sporting or other event.

Yeah it's just the way he worded the tweets. I've known about the "state prize pool in advance" thing for years. Regardless, I think it is outrageous that this line of thinking is determining what is legal or not.

The biggest risk for DFS industry is NOT regulation, but whether it can attract mass market appeal and avoid becoming too “hardcore”. Namely, FD/DK run the risk of becoming over run by algo’s & quants, which could preclude industry from ever penetrating mass market and achieving our revenue projections.

Also saw a tweet from some FSTA guy whining about the gamblification of dfs.

I think the biggest problem the industry is going to face is the fact that there is no limit to the amount of entries the best players and therefore closest to optimal lineups can run. When every game down to a $1 10 man SnG is infested by 3-4 of the top players, it will siphon the edge away from everybody else so rapidly that it'll end up being like the post-poker boom but happen way quicker imo.